Treasury
Secretary Jack Lew warned Congress that the government could run out of
borrowing authority needed to help pay its bills as soon as February if the
federal debt ceiling is not raised soon. In a letter to Congress, Secretary Lew
said, "I respectfully urge Congress to take action to raise the
debt limit at the earliest possible moment."
In October, the spending cap was
raised by Congress until February 7 allowing for the government to continue to
borrow. If the debt ceiling isn't raised by then, Treasury will be able to
juggle money between government accounts for a few weeks to keep just under the
new limit.
Lew said the Treasury
department would exhaust these so-called extraordinary measures sometime
between late February and early March. After then, it would no longer be able
to borrow to cover its expenses.
Once the spending
cap is reached, the Treasury will lose the ability to borrow, and would have to
pay obligations only with incoming revenue and any cash left in public coffers.
Once this money runs out, government could start missing payments on programs such
as Social Security. Many economists think a U.S. default could trigger a
financial panic and perhaps even an economic depression..
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